The Gypsy and Traveller Sites Grant, launched in 2008, had £97m available to “reduce the number of unauthorised sites” and “reduce the need for costly enforcement action”. But only £16.9m has been spent. A lack of ring-fencing has meant millions being channelled into affordable homes not intended for Gypsies.

The diversion of the public money emerged as an eviction at the Dale Farm Travellers’ site in Essex, estimated to cost Basildon council up to £18m, became stuck in a legal quagmire with a further high-court hearing on its fate due on Thursday.

“Given that the lack of Traveller sites is central to the Dale Farm problem, it is shocking that millions have been taken away that should have been used for site provision and other projects,” said Simon Woolley, a commissioner with responsibility for Travellers, at the Equality and Human Rights Commission.

Lord Eric Avebury, chair of the all-party parliamentary group for Gypsy, Roma and Travellers, said the effect of grandiose promises made to Travellers had been “pretty measly”. He added: “The government’s policy on Gypsies and Travellers is a shambles – if you are going to put a four-year programme in place then local authorities have to be aware of it and ready to use it. It is indicative of the total lack of willingness of successive governments to address the needs of Gypsies and Travellers.”

The grant programme, which had a stated aim of creating new, permanent, sites, to “tackle the inequalities experienced by Travellers … one of the most disadvantaged [groups] in the country” has led to building of just four new sites, with a total of 37 pitches; 62 new pitches were created on existing sites and 178 pitches were refurbished.

A lack of political will is responsible for the failure to provide the required 3,000 sites, according to the government’s annual caravan count, said the MP Andrew Slaughter, a member of the Gypsy, Roma and Travellers parliamentary group.

Slaughter said: “Local authorities are unwilling to take the grant often because of pressure from electors who say they do not want a site near them even it will solve local problems and cost nothing.”

The situation will be worsened by the localism bill, which scraps the requirement for local authorities to use a common method for assessing the needs of Gypsies and Travellers, and removes councils’ obligation to allocate sites, he added.

The coalition scrapped the Gypsy and Traveller sites grant in 2010-11, but reinstated a sum of £60m for 2011-15. That amount is about half of the yearly total previously available.

The Department for Communities and Local Government said the cut was made as part of its “contribution to reducing the national deficit”, and that targets had been abolished because “they did not work, alienated communities and did not always accurately reflect the need on the ground”.

Councils were being given more powers to address local housing and planning issues with “incentives” to provide appropriate sites, including a “duty to cooperate”, ensuring local authorities worked together. There was also the new homes bonus, whereby the government matches additional council tax raised by new homes.

But that bonus was rated by Slaughter as “a perverse incentive” since councils would draw significantly more council tax from luxury developments than Traveller sites.

The situation was likely to create more Dale Farms, the MP said: “The government has given in to pressure from backbenchers to give local authorities a device to veto construction of new sites. That will mean few if any new sites built even if money’s available, more expensive evictions, more conflict and the continuation of appalling life-indicators for Gypsies and Travellers.”

Candy Sheridan, who is a member of the Gypsy Council and a campaigner at Dale Farm, told the Guardian’s Focus podcast that the Gypsy community was being let down and ignored. “It’s appalling. We have not been catered for and we continue to be vilified,” she said. “There are councils everywhere who don’t want to deliver for us – they say we have enough Gypsy sites. Where do we fit in?”

Additional reporting by Peter Sale

“It was an honour to be with the residents and activists who repelled the eviction of over 80 families from Dale Farm. The planned eviction of the Dale Farm residents is a human rights issue that everyone who cares about justice should be aware of.

Come to Dale Farm and increase the power of the people to compel justice.” Ken O’keefe

Read More in Dale Farms…..

Truth & Lies – Why Dale Farm Matters – The Irish traveler community of Dale Farm in England are facing a forced eviction, they are also facing a racist system that falsely claims that the residents of Dale Farm are flouting the law

Dale Farm Solidarity -Dale Farm resident, Mary McCarthy, said “I can’t believe that Basildon Council are placing the rights of newts over the rights of our community to a home. The council is finding any excuse to drive us out of Basildon.”

Dale Farm supporter, Ali Saunders, added “Tony Ball’s leadership is becoming untenable. It has been shown in court that there are alternatives to a confrontational eviction strategy at huge human and financial cost. Tony Ball needs to resign or return to the negotiating table.”